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Poor representation: big problem in real estate
by Don Dunning, ABR, CRB, CRS
DRE Lic. #00768985
Originally appeared in Hills Publications, July 22, 2005

In recent years, the real estate “gold rush” has brought thousands of individuals into the business locally. Statewide, the California Association of Realtors projects, by year end, there will be 179,000 members. The intensity of the market seems to have added an urgency to “get the deal.” Unfortunately, too few salespeople, new or established, truly comprehend and practice working in a client's best interests.

At some point, when the market shifts, a number of buyers will look back and realize their agent did a lot of selling and not enough representing. Understanding your agent's key function before it is too late could save you distress and money.

Three offers from same agent

In a multiple-offer situation on one of my listings, an agent wrote three different contracts for three distinct buyers. If I had not experienced this personally, I would not have believed this lack of professionalism. None of his buyers got the house.

It seems unlikely that each buyer received full disclosure that “his” agent was also the agent, regarding the same property, for two other buyers. Would you, as a buyer, accept this? Attorneys, who outnumber Realtors, lick their chops over these kinds of flagrant failures.

Eighty-one bids on one house

Last month, there were an amazing 81 offers on a “fixer” listing in my office. Due to the number, agents “dropped off” their offer, as opposed to personally presenting it to the seller. As I sat observing, during a 30 minutes time frame, agents, one after another, delivered contracts to the receptionist.

One of them said, “While I am here, can I get a look at the reports?” The receptionist asked if he had previously requested them. He said “no,” but he would like to see them now. I was bewildered at how anyone could write an offer, especially on a major fixer, without first carefully reviewing all disclosures and reports.

My thought process was abruptly interrupted when another salesman came in, handed his offer to the receptionist and asked for reports because he had not “had a chance” to get them beforehand.

Interestingly, some agents asked how many contracts had come in and stood in shock as the receptionist recited ever higher numbers: “sixty-eight,” “seventy-three” and so forth. I question how many had explained to their buyers the relationship between the number of bids and the probable selling price.

In the majority of cases, offers were written in the “hope” they might be accepted, with no realistic evaluation of what was unfolding. In assessing value, how many agents had the knowledge and sensibility to break down, for their buyers, the asking price plus projected repair costs, plus updating, to see what offer, if any, made sense?

Part of representation is for an agent to let his buyer know when it is time to “take a pass.” If you knew there would be 80 offers competing against you, would you be number 81? How many of these agents bothered to call and find out? The listing agent was telling everyone that 300 packets of reports had been sent out. That was a clue not to be ignored.

Also illuminating was the number of offers that had no chance of being accepted. As the house was a “wreck,” only an all cash buyer or someone with access to private financing could be considered. This did not stop a horde of agents from writing contracts calling for a conventional loan, nor did it prevent some from asking for a “termite clearance” from the seller, an absurd concept for this property.

Seeing this unfold in front of my eyes, I wondered who these buyers were and if they had any idea what they were doing. In some cases, buyers had never seen the house; in others, buyers had not even signed the contract.

Analyzing reports and disclosures

Many homes are being sold, usually in competition, where the implications and costs of work to be done are not fully understood. For example, I recently reviewed the reports and disclosures on a house my buyers' really liked. Before I received the package, I asked the listing agent, in a voice mail message, if there were any serious structural issues. She never responded to that question.

In two reports, there were recommendations for an engineer to inspect the foundation. There was a drainage inspection by an engineer, but he had not looked at the foundation. I pointed out this curious fact to my buyers and advised them not to bid in competition on the house.

From experience, I suspected that most buyers, in their desperation and with little or no guidance from their real estate representative, would overlook or minimize the seriousness and expense of foundation and drainage work. This meant that, when compared to buyers who did not understand the costs and aggravation involved, my buyers' bid, would, most likely, not be acceptable. Further, I explained that there would be many other future choices without these structural concerns.

Final thoughts

Representation means working with a professional who has the experience, knowledge and caring to assist you in making sound decisions. This could involve help with pricing and valuation, which is related to location, condition, style, charm (or lack of), quality of schools, size, floor plan, outdoor living, number of steps, privacy, noisy vs. quiet, proximity to desirable shops, restaurants and public transportation, as well as other factors.

Now more than ever, buying or selling a home will be one of the most significant business transactions of your life. There are excellent Realtors in the business, but you must be discerning to find them. Do not choose an order-taker; work with someone who knows that being an agent means representing your best interests.

Related Articles:  Confirm Competing Offers and Condition is Critical

Don Dunning has been a full-time, licensed real estate agent since 1979 and a broker since 1982 and is past president of the Oakland Association of Realtors. He provides sales and hourly listing or consulting services with Wells & Bennett Realtors in Oakland and is an expert witness in real estate matters. Call him at (510) 485-7239, or e-mail him at , to put his knowledge and experience to work for you.

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